The Swiss Bank Accounts of Leader and Secretary of Bulgarian Trade Union

Documents that Bivol examined and validated show that the former President of the Confederation of Labor “Podkrepa” (Support), Konstantin Trenchev, and the Secretary General of the Union, Andrey Varbanov, received in the period 2002 – 2008, hundreds of thousands in the form of donations, sponsorships and loans. And in 2009, CCB opened for them Swiss accounts registered to offshore companies.

Offshore support

Trade union activity in Bulgaria is clearly very much at the heart of several US companies registered in states with offshore legislation. They regularly have granted donations in cash to the Confederation of Labor (CL) “Support”. Trenchev has personally signed the contracts for donations.

Thus, on March 5, 2002, in Sofia, the company Unicon Investments LTD, registered in the offshore state of Delaware, with President Dimitar Gerassimov, donated 50,000 levs in cash. On June 20, 2002, Lancs Corp., from the same state, donated 20,000 levs “for the needs of the Confederation”, also in cash. On October 10, 2002, La Verne Investments, with President Daniela Zaharieva, donated 20,000 levs for “social training of personnel of the Confederation”.

It is probably a pure coincidence that on October 9, 2001, this same Gerassimov has been elected Chairman of the Board of Directors of the cigarette factory “Yuri Gagarin – BT” in Plovdiv, owned by Bulgartabac. Such a sensitive post implies good relations with the party largely representing the Muslim minority in Bulgaria – Movement for Rights and Freedoms (DPS), which was then in power and the appointment hardly passed without the sanction from the highest place in the “Seraglio” (the name of the residence of the DPS lifetime honorary Chairman Ahmed Dogan – editor’s note).

What happened with this money; has it been accounted for in the coffers of the Union; was it deposited in its bank accounts; was it used for the needs of the Confederation and for training?

Contacted by phone, Dr. Trenchev remembered Gerassimov. “There were donations, of course I personally know that someone named Dimitar Gerassimov helped us then because there were payments for a Congress, but I do not remember on whose behalf. Apparently, one has to see the documents.” People from the headquarters of CL “Support” also promised to check the archive and answer our questions.

“Union representative” paid for Trenchev’s daughter’s education in the United States

At the end of 2002, Gerassimov left the Board of Directors of “Yuri Gagarin” and on July 4, 2003, he was appointed by Minister Milko Kovachev in the Board of Directors of “Maritsa Iztok” as “union representative.” Gerassimov held this post until 2008.

Apart from government jobs, however, Gerassimov was actively developing private business with fuel and food, including abroad, as the company’s records show. In 2005, “the union representative” Gerassimov already emerged as representative of the now-known offshore Lancs Corp, which on July, 21, 2005, paid the tuition of Konstantin Trenchev’s daughter in a medical school in the United States.

The generous sponsor has wired to the Stony Brook School of Dental Medicine 21,083.92 US dollars for “training and equipment rental” for Maria K. Trencheva. The transfer was ordered from the account of Lancs Corp. in CCB through the partner bank HSBC London.

Dr. Trenchev confirmed the information about the sponsorship. “He (Gerassimov – editor’s note) asked, and then everything was paid back to him,” said the union leader and explained that it happened in a time of troubled finances for his family when his wife changed jobs in the United States. Trenchev and his daughter accepted the sponsorship offered by Gerasimov, but then paid him back the entire amount.

Trenchev’s difficulties apparently lasted long because Gerassimov also paid for the second year of study. The fee of 25,616 US dollars for 2006 has been transferred into two tranches on August 16, 2006, also from the account of Lancs Corp. in CCB. It is also unclear why a sponsorship agreement has been signed between Maria Trencheva and Lancs Corp., and not for example a student loan one. Such contracts for

cash loans

for hundreds of thousands of euro, levs, and dollars have been granted by the same offshore companies as interest-free loans to the Secretary of CL “Support” Andrey Varbanov, other documents show.

On March 19, 2003, Unicon Investments transferred to the ownership Andrey Varbanov 80,000 interest-free US dollars with a term of March, 19, 2013. On December 14, 2005, La Verne Investments granted 100,000 levs until December 14, 2020. On February 14, 2007, Lancs Corporation paid 100,000 euro with a period of return February 14, 2017. Larger amounts are marked in the handwritten notes of the contracts, but it is not clear whether they were repaid. On March 3, 2007, a new company emerged – CBG Chester Business Group, registered in New Jersey, United States, with proxy Georgi Lyubomirov Iliev. It also gave Varbanov 100,000 euro.

What is happening to these companies today? Lancs and La Verne were deleted on the same day – January, 3, 2009. They were created on the same day – April 4, 2002, documents from the company registry of the state of Delaware show. The period of their existence suspiciously coincides with Gerassimov’s stint as union representative on the boards of large public companies.

Unicon Investments is currently still active as the owner of “Byala Voda (White Water) – Dolna Banya”, a company that was managed by Gerassimov until March 2011. “CBG- Chester Business Group” owns “Eco foods and oils”, which has been previously owned by Gerassimov.

A link between trade union leader Andrey Varbanov and Gerassimov can be found in the company “Sitrad Airline”. The company has been owned by the already deleted offshore company La Verne Investments, and Gerassimov and Varbanov were on the Board of Directors from 2003 to 2007. In 2009 “Sitrad” was declared insolvent, because it did not pay its rent in the Interpred building.

What has Varbanov done with these loans? Has he declared them? Is he intending to repay them? To whom is he going to return them since the two companies are de facto already gone? Bivol sent questions to the trade union headquarters and was told that Varbanov is in the hospital.

“You will have to ask him. I think he has not received anything,” said Dr. Trenchev on the phone. He explained that the Secretary General is being treated in the Military Medical Academy and is to undergo surgery.

In addition to well-paid government posts, topped with offshore activity, Gerassimov is also connected to football. In 2007, he tried to buy “Lokomotiv Plovdiv” no longer as a “trade union representative”, but as “a representative of an American investment fund”. In this he failed, but his passion for the football led him in 2011 to Vidin, where he became known as “St. Demetrius” who saved from bankruptcy the local club “Bdin”.

The saving was accompanied by a change in the ownership of the club. Gerassimov officially claimed that he did not want to be the owner, but only benefactor. In reality, however, the Seychelles offshore company Toller Ltd, operated by someone named Petar Georgiev Velkov, became a shareholder in the club. The same has taken over the management of “White Water – Dolna Banya” which to this day belongs to the generous donor Unicon.

Bivol made efforts to contact Dimitar Gerassimov and ask him questions. The President of “Bdin” proved hard to find. A possible reason for this discretion was explained by the former union leader Dr. Trenchev: “Over time he (Gerassimov – editor’s note) started abusing our acquaintance. He was posing as our CFO. People came and said so and so, the man spoke to us… And we did not know anything. Finally, in 2011, I was forced to turn to the prosecution, because the man speculated with being our acquaintance and was apparently making some commitments of which we knew nothing,” he said.

CCB and CL “Support” – from cash to Swiss accounts

“At the same time each month, politicians and trade unionists were coming out of CCB with lumps in their pockets that they had not had when coming in or with special corporate briefcases in their hands.” Against the backdrop of the above, this statement of a former Director of the Bank no longer sounds so metaphoric.

But in early 2009, the scheme of funding union leaders evolved from the dangerous carrying around of cash to a modern offshore structure. Trenchev and Varbanov became owners of companies registered in the British Virgin Islands. Accounts have been opened in a Swiss bank on behalf of these companies.

The process of registration of offshore companies was headed by Svetlana Bahchevanova, who was a trusted person of CCB majority shareholder Tsvetan Vassilev and former senior manager in the telecom BTC. She communicated with the Swiss branch of Trident Trust and the British bank RBS Coutts through an email account registered in Gmail with the initials of [email protected], and not through a Bank’s address. The leaked correspondence elucidates the whole scheme, which is probably applied to other special customers as well:

December 2008, Svetlana Bahchevanova wants to hide behind offshore companies the “customers” Mr. T and Mr. V.. She also turned to Huber Fortunat from the Swiss branch of the bank RBS Coutts;

RBS Coutts sends a request to the Swiss office of the registrar Trident Trust. Michael Meyer returns a list of offshore companies, freshly registered in the British Virgin Islands (shelf companies). The company documents of some of them have already arrived in the office of Trident Trust in Zollikon Switzerland and could be used for express orders;

As offshore companies are a sought-after commodity and go very quickly, the customer had to indicate in order of preference three names of companies on the list. RBS Coutts asked for copies of the ID cards of the beneficiaries with their addresses;

On January 16, 2009, Bahchevanova sends the preferences – Mr. T. has liked in numerical order ZABEL ADVISORS INC, PEZIBELIX SERVICES INC and ELMER INTERNATIONAL CORP. The first is obviously gone and he ends with PEZIBELIX. Mr. V. has better luck with his first preference ZUMPAN FINANCE CORP. Bahchevanova also wants from RBS Coutts the address and the names of the directors of the companies in order to “prepare two agreements with them”;

The provided copies of identity cards clearly show who Mr. T and Mr. V. are – Konstantin Trenchev, the happy new owner of PEZIBELIX SERVICES INC, and Andrey Varbanov of ZUMPAN FINANCE CORP (the addresses and the social security numbers in the photocopies were deleted by the editorial office);

RBS Coutts Bank opens accounts in its Swiss branch on behalf of the offshore companies;

There is a handwritten note in the available documentation, according to which the Swiss company EFG, which is associated with Tsvetan Vasilev, had to wire 600,000 euro for Trenchev’s company and 500,000 euro for the company of Varbanov. There are instructions for the payment, which included the bank accounts of the companies. However, there is no confirmation of payment.

Bivol did not receive by the editorial closure of the article a response to the questions asked via email to Svetlana Bahchevanova and Trident Trust. The RBS Coutts email addresses are no longer current, so is one of the addresses of Trident Trust. The letters sent to the other address of Trident Trust, including to Bahchevanova’s mail address with the Gmail account, however, were not returned as non-existing addresses.

Bivol sent questions to the PR department of the Bank, which in addition to Switzerland, also has branches in some offshore destinations, including Dubai and Qatar. We asked whether they confirm or deny that Varbanov and Trenchev are the real owners of ZUMPAN and PEZIBELIX; if accounts in the Swiss branch of the bank have been opened for these companies, and if there was correspondence on the matter with Bahchevanova and Trident Trust.

“We are unable to comment on any aspect of this topic,” reads the short answer signed by Pauline Loohuis.

The prosecutors also knew about the offshore companies

The above-described mechanism has obviously been well-tried and tested and was probably used for other important clients of CCB to avoid telltale visits to the bank and the pocket lumps.

It is pretty clear where the money in the Swiss account of EFV came from – from deposits in CCB, used by Tsvetan Vasilev for other business projects. EFV is the offshore company behind “Hedge Investment Bulgaria” which controls the military factory “Dunarit”. What were the favors done by the union bosses that earned them the hidden transfers to offshore companies? Are we talking about corruption? These are questions worth 3.4 billion euro, paid by the Bulgarian taxpayer.

These are questions that, according to Dr. Trenchev, are in the focus of the Bulgarian Prosecutor’s Office as well. The trade union leader had testified and was asked precisely about PEZIBELIX, but has signed a confidentiality statement of investigation secret. He explained this himself on the phone when we asked him a question about the registration of the offshore company and the Swiss account.

The latter fact gives hope that law enforcement authorities have not given up on following the money trail. Too slim of a hope, because the scheme disclosed in the Bahchevanova’s correspondence shows that all transactions passed through the accounts of companies in the Swiss jurisdiction. There is need of a workable legal cooperation with the Swiss authorities to lift banking secrecy and track payments. As other cases have shown, the prosecution is not in a hurry with such international legal orders. An investigation of Bivol in the notorious “Swiss Disk” established that not only the prosecution, but the State as a whole is in no hurry to learn the details about the Bulgarians with Swiss accounts. “Catch me if you can.”